A state-run health insurance exchange was supposed to be the most important topic Idaho lawmakers would consider when they began their 2012 legislative session. But as the session drew to a close at the end of March, exchange establishment never even received a legislative hearing.

President Obama's health care law called for the implementation of a health insurance exchange in every state by 2014. Given that Idaho could tap into $20.3 million in a taxpayer funded grant from the federal government to establish an exchange there, the issue was expected to be a contentious showdown, with Idaho insurers wanting to tap the federal cash over objections by conservative lawmakers.

Intense Public Opposition

Yet the conflict never materialized, according to State Rep. Bob Nonini (R-Coeur d’Alene), the leading opponent of exchange implementation in Idaho’s House of Representatives. Nonini says there turned out to be so much public opposition, the exchange never had a chance.

“The issue just couldn’t gain any traction in the Legislature,” said Nonini, who had offered up his own resolution which would allow private insurance companies to create their own private health insurance exchange.

“I figured if the insurance companies were going to profit from the health care exchanges, and since they wanted them so badly, they should put up their own money to form private health care exchanges,” he explained.

Implementation Could’ve Undercut Case

The legal challenges to ObamaCare also complicated the matter, Nonini said. Since Idaho is one of 26 states with Republican governors suing to overturn Obama’s law, going to the trouble and expense of setting up an exchange might undercut its argument to the Supreme Court.

“Right now, we’re in a holding pattern. We’re waiting on the decision and on the November election. We’re hoping that a Republican gets elected, because all four of the Republican presidential candidates have said they would overturn ObamaCare if elected,” said Nonini.

Idaho has one of the most heavily Republican legislatures in the country. Republicans dominate the state legislature, holding about 88 percent of the seats there—the Idaho House has 57 Republicans and 13 Democrats, and the state Senate has 28 Republicans and 7 Democrats.

Two Lines of Thought

Politics aside, there are currently two schools of thought in the free-market health care policy world on the exchanges, which cut across partisan lines, according to Roger Stark, M.D., a health care analyst at the Washington Policy Center. He says some legislators believe the exchanges provide an opportunity to reset the health insurance market in any given state and introduce more free-market offerings, but others believe the exchanges will deliver regulations and subsidies which warp the marketplace to Washington’s whims.

“These folks also believe if states plow ahead with exchanges, the Supreme Court will have more proof ObamaCare is constitutional and will believe inertia is with allowing the law to stand,” Stark said. “States which are setting up exchanges are doing so because it's the law and the feds provide grant money to the states to help finance the setup costs of the exchanges. I would imagine if states do show bipartisan support, it's because of the federal money.”

Popular Sentiment Opposed

In any case, a state-run health exchange is just a bad idea, says Wayne Hoffman, executive director of the Idaho Freedom Foundation.

“There’s a reason this legislation went nowhere: It would have created another state bureaucracy that would do nothing to help Idahoans with their rising insurance premiums. In fact, the reverse is true—it would have resulted in higher premiums because now customers would be forced to pay higher fees in order to support the new bureaucracy,” Hoffman said.

According to Hoffman, popular sentiment in Idaho went strongly against implementation.

“Rep. Nonini focused a lot of the popular sentiment about exchanges in Idaho. He submitted legislation that said if the insurance industry wants to create a website so bad that shows insurance policies and their prices, then they should do it without any public money. In a lot of ways, the industry is already doing this, so there is no reason the government should be partnering in this venture.”